Mayor: This year going to be tougher than last

The outlook isn't that great for Houston. We know the city is dealing with an estimated $130 million budget gap and that could ultimately mean cuts to the departments we rely on most -- police and firefighters.

In front of more than a thousand of Houston's business leaders, Houston Mayor Annise Parker laid out her plans for the city Friday morning in the annual State of the City address at the Hilton Americas Houston in downtown. Mayor Parker offered a frank assessment of the city's financial bind.

"The year ahead is going to be tougher for us in the city of Houston than the last year," said Mayor Parker.

With the city facing a multi-million dollar budget shortfall, the mayor says the biggest challenge will be to keep all current police and firefighters on the payroll.

"We have not laid off a single police officer, we have not laid off a single firefighter, although both departments have faced cuts for the first time in decades," said Mayor Parker.

The head of the Houston Fire Department admits there will be some painful cuts, but won't say exactly what.

"We're looking at all options at this time," said HFD Fire Chief Terry Garrison.

When we asked if that means the possibility of closing some fire stations, Chief Garrison replied, "I would rather not say at this time. All I can tell you is that we're woking really hard."

The police chief was a bit more forthcoming, admitting that some storefront hours will be reduced, and that police helicopter hours may be cut to save on fuel costs.

"We'll still be able to deliver our core services that we deliver now to the public, but we might just have to do those differently," said HPD Chief Charles McClelland.

Mayor Parker says in the past months, tax revenues have increased, but admits even in the best-case scenario some people will lose their jobs.

"I'm going to be laying off personnel for budgetary reasons -- not for efficiencies, not because I want them to go. I can't tell you today how many people that will be," said Mayor Parker.